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CHRISTINE ROMANS, CNN ANCHOR: The prison sentence for Chelsea Manning commuted by President Obama. How could the move affect handling of leaks under future administrations?

JOHN BERMAN, CNN ANCHOR: Just two days until Donald Trump's sworn in as president. Final preparations under way, as more Democrats decide to boycott.

ROMANS: And a big day on Capitol Hill. Trump's nominee to overhaul Obamacare will face the Senate a day after the education nominee ran into pushback from Democrats.

Welcome back to EARLY START. I'm Christine Romans.

BERMAN: I'm John Berman. About 30 minutes after the hour right now. Nice to see you this morning.

ROMANS: We'll get to those in a moment. But, first, breaking news this morning, 92-year-old former President George H.W. Bush has been hospitalized in Houston.

[04:30:06] Now, this is according to local media. His office chief of staff Gene Becker telling KHOU-TV and "The Houston Chronicle" that the elder Bush is doing fine, although the reason for the hospitalization was not immediately disclosed. The Bush's office say it expects him to go home in a couple of days.

BERMAN: That will be nice. Of course, you know, President Bush was never planning to attend the inauguration, because of these ongoing health issues. He's been in and out of the hospital a few times over the last few years. But very much enjoying his family, keeping current on other things.

ROMANS: A robust 92 years old, we wish him well.

BERMAN: Indeed.

All right. Big news from President Obama on his way out the door. The president commuted the 35-year prison sentence of Chelsea Manning, the former Army private convicted of leaking 750,000 pages of documents and videos will now be released in May. And this move has already steered up significant controversy.

A senior defense official tells CNN the president made the decision over the objection of his own Secretary of Defense Ash Carter. Manning, you'll remember, released the secret documents in 2010 through WikiLeaks, which has been advocating for his release. Of course, in this past election, WikiLeaks and his founder Julian Assange leaked documents that the intelligence community says were hacked by Russia, with the aim of helping Donald Trump.

Now, there's been no word from the Trump team, at least not yet, regarding the decision on Manning.

ROMANS: But now, the world is waiting to see if Manning's clemency paves the way for Assange to be extradited from England. He has been hold in the Ecuadoran embassy there for nearly five years. He is wanted by Swedish authorities in an unrelated sexual assault case. Assange has said he fears surrendering to Sweden could lead to him being handed over to the U.S. for prosecution for his work on WikiLeaks. But last week, WikiLeaks tweeted, if Obama grants Manning clemency, Assange will agree to U.S. extradition despite clear unconstitutionality of the Department of Justice case.

For the administration's perspective on all this, let's bring in CNN White House correspondent Michelle Kosinski.

(BEGIN VIDEOTAPE)

MICHELLE KOSINSKI, CNN WHITE HOUSE CORRESPONDENT: Hi, John and Christine.

Right. So, now, we're hearing from White House senior officials who are boiling down the White House's thinking on this commutation to three points -- that Chelsea Manning accepted responsibility for her crimes, that she expressed remorse for them, and that she already served more than six years of a very long sentence, originally 35 years. They said President Obama feels that that is sufficient, especially compared to others who have committed similar crimes.

They don't want to back away from the seriousness of those crimes, though. What they're saying is that President Obama still has serious concerns about the crimes that she committed, that they were not good for national security, and that the U.S. had to take steps to mitigate damage that was done from them.

The White House was asked, well, does this have anything to do with humanitarian grounds, the fact that Manning is transgender and has struggled while she's been held in prison, that she tried to commit suicide? They didn't get into that.

They also said this had nothing to do with Julian Assange of WikiLeaks promise that if her sentence was commuted, that he would be willing to face extradition to the U.S. to stand for his crimes. They said that this commutation was based only on those points that I mentioned. And, you know, it remains to be seen whether a song honors that promise that he made -- John and Christine.

(END VIDEOTAPE)

BERMAN: Thanks, Michelle.

Moments after the clemency announcement, WikiLeaks tweeted victory and a brief statement from Julian Assange. It read, "Thank you to everyone who campaigned for Chelsea Manning's clemency. Your courage and determination made the impossible possible."

The ACLU and Amnesty International also cheered the news of Manning's commutation.

ROMANS: But on Capitol Hill, the reaction from Democrats was muted and it was harsh from Republicans. West Virginia Senator Joe Manchin, a conservative Democrat, say the shortened sentence was dead wrong. It gave a green light to hacking and cyber attacks.

(BEGIN VIDEO CLIP)

SEN. JOE MANCHIN (D), WEST VIRGINIA: It is wrong.

REPORTER: Why is that?

MANCHIN: That was treason and espionage. It should have been 35 years.

(END VIDEO CLIP)

ROMANS: Republican Senator Lindsey Graham told CNN's Dana Bash, "Manning stabbed his fellow shoulders in the back by releasing classified information and putting their lives at risk. President Obama, by granting clemency to Manning, slapped all of those who serve honorably in the face."

Senator John McCain also very sharp words for this decision, saying that all of those whistle-blowers who use the proper channels, their efforts and their sacrifices have been diluted by this.

BERMAN: Not the only commutation issued by the president. He granted about 200 others, including to one retired four-star General James Cartwright, an outright pardon. In 2012, Cartwright pleaded guilty to a single charge of making false statements to federal investigators about leaking top secret information to journalists.

Also, Baseball Hall of Famer Willie McCovey was pardoned for tax invasion conviction from 1995. In a statement, McCovey said, "I want to express my sincere gratitude to President Obama not only for his kind gesture on my behalf, but also for his tireless service to all Americans."

[04:35:05] Ian Schrager also from Studio 54.

ROMANS: That's right, Ian Schrager.

All right. This morning, Donald Trump is at Trump Tower where he'll be very busy in his final day in New York before moving to Washington. At the top of his agenda, finishing off writing his inaugural address. In a departure from the speeches he gave on the campaign trail which were either off the cuff or written by a senior aide, the transition team claims he's writing this big speech himself.

CNN's Jeff Zeleny has a preview of Trump's last full day in New York as president-elect.

(BEGIN VIDEOTAPE)

JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: John and Christine, two days before Donald Trump takes office, he's putting the finishing touches on his inaugural address. We're told that he's writing it himself after watching and reading several recent addresses and ones from history. He studied President Ronald Reagan and even President Barack Obama's.

Now, the president-elect made a quick trip to Washington last night for the first inaugural event, at Chairman's Global Dinner, featuring diplomats from around the world, as well as Vice President-elect Mike Pence and some of their top campaign contributors. He's back in New York today, scheduled to spend the final day working out of Trump Tower. His last day before he becomes president, before moving to Washington on Thursday.

Now, Washington is alive with activity with all of the traditional transfer of power. President Obama gives his last press conference today at the White House, even as four key confirmation hearings unfold on Capitol Hill.

Now, the list of House Democrats boycotting the inauguration continues to grow, now more than 50. But so far, no Senate Democrats have added their names to that list. That's important. Trump will need the cooperation of some of them to get his agenda through Congress.

But it's also important to remember, starting Friday, Republicans control the House, Senate and White House for the first time in a decade, a new wilderness for Democrats if they're protesting or not -- John and Christine.

(END VIDEOTAPE)

BERMAN: All right. Thanks, Jeff.

As Jeff just mentioned there, the president-elect was briefly in the nation's capital last night. He attended a black tie invitation-only dinner. We can't tell if that's a tuxedo. I don't know that it is. It feels like a bluish tie with a dark suit. This was held for foreign diplomats to meet members of the incoming administration.

And the president-elect was quick to praise former ExxonMobil CEO Rex Tillerson, his choice to be secretary of state.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT-ELECT: And we have great respect for your countries. We have a great respect for our world. We have a man that I wanted right from the very beginning, Rex Tillerson. And these lights are bright but he's out there somewhere. Where is Rex?

Thank you very much. Thanks, Rex.

I think it's tougher than he thought. He thinks -- you know, he's led this charmed life. He goes into a country, takes the oil, goes into another country --

(LAUGHTER)

It's tough dealing with these politicians, right? He's going to be so incredible.

(END VIDEO CLIP)

BERMAN: It isn't clear actually that Rex Tillerson was his choice all along. Remember, Rudy Giuliani was the name first floated, then Mitt Romney. And it was only after cycling through a few names that he ended up settling on Rex Tillerson at the advice of the likes of former Secretary of Defense Robert Gates and others.

Tillerson faces, you know, a difficult confirmation battle in the Senate. Marco Rubio says he's still undecided on whether or not he will vote on him.

ROMANS: All right. Confirmation hearings get underway in the Senate today for four of the president-elect's cabinet picks. Wilbur Ross is the nominee for commerce secretary. Scott Pruitt tapped to head up EPA. South Carolina Governor Nikki Haley up for ambassador to the United Nations. And Georgia Congressman Tom Price has been tapped to be secretary of health and human services.

On Tuesday, of course, it was a tough day of questioning for the education nominee Betsy DeVos.

Let's get more on that from CNN's Phil Mattingly on Capitol Hill.

(BEGIN VIDEOTAPE)

PHIL MATTINGLY, CNN CORRESPONDENT: John and Christine, week two of confirmation madness kicked off on Tuesday. It was really kind of one primary hearing everybody was focused on, and that was the president- elect's selection to be his next education secretary, Betsy DeVos.

Now, she is well-known both in political circles and in education circles for a couple of reasons. Politically, she comes from a family, and she herself, some of the biggest donors in the Republican Party.

As part of that donation, a part of where their money goes, education reform. Vouchers, charter schools, big issues that the DeVos family and Betsy DeVos in particular have focused on that have made her a prime target for Democrats.

And that's certainly showed in her confirmation hearing. Take a look at this exchange between Senator Elizabeth Warren and Betsy DeVos, primarily on how much experience the nominee actually has. SEN. ELIZABETH WARREN (D), MASSACHUSETTS: Mrs. DeVos, have you ever

taken out a student loan from the federal government to help pay for college.

BETSY DEVOS, EDUCATION SECRETARY NOMINEE: I have not.

WARREN: Have either of your children borrowed money in order to go to college?

DEVOS: They've been fortunate not to.

WARREN: Uh-huh. Have you had any personal experience with the Pell Grant?

DEVOS: Not personal experience, but certainly friends and students with whom I've worked.

WARREN: So, you have no personal experience with college financial aid or management of higher education?

MATTINGLY: Now, even though there were consistent attacks from Democrats and outside groups, particularly public school teacher, labor unions have been really targeting her nomination, she has a lot of heavy support as well.

[04:40:11] Jeb Bush, obviously the tormenter, or tormentee, if you will, of the president-elect throughout the Republican primary process has come out in support. A lot of outside support, a lot of Republicans who feel like Betsy DeVos represents the direction they want to go when it comes to federal education policy. They've gotten behind her nomination.

And there's every expectation that she will be confirmed barring some late-breaking development we haven't heard about yet.

Now, it becomes the view of who comes next, and guys, there's no question about it. Today's hearing with Tom Price, the selection to be secretary of health and human services is the biggest one on the docket, probably this week, maybe for the entire administration. Think about the number one policy issue for the president-elect -- repealing and replacing the Affordable Care Act. Tom Price has a huge role in that, not only because he has the expertise working on this issue on Capitol Hill, working as a doctor. But also in that role, he can do a lot unilaterally to help that process along.

But he has major problems as well. Democrats with pointed policy questions for him, but also pointed questions about Tom Price's ethics, how he operated on Capitol Hill, our own Manu Raju breaking a lot of news about how Tom Price used his private trading account, whether or not there was possibility of insider trader. We've seen a lot of Democratic senators point to that. So, that might be a problem.

Keep a very close eye on those questions. Now, Tom Price answers them at that hearing today John and Christine.

(END VIDEOTAPE)

BERMAN: All right. Phil Mattingly for us on Capitol Hill.

Some pretty good low approval ratings for the president-elect as he prepares to be sworn into office, historically low. The latest CNN/ORC poll shows only 40 percent approve of the way Trump has handled the transition, 52 disapprove.

And look at this, 53 percent said their confidence has decreased in the president-elect since election day. This does not happen normally. This is the honeymoon people. People like you more after the transition traditionally.

Now, the president-elect does get good numbers when it comes to jobs, 61 percent believe he will create good paying jobs as president. And, you know, in the transition, the Trump team will tell you that this is what matters. That watch what he does, not how people feel about him. In long term, they say, these numbers will turn around.

ROMANS: All right. Donald Trump claiming another victory on job creation, after Walmart and General Motors both announced U.S. investments, clearly executives do not want to anger this incoming administration.

But is this good public relation, or is it a real change in their truly globalized business models? So far, I'm telling you, it's not clear. Here are the automakers who have issued press releases touting job creation since the election. Ford promising 700 jobs in Michigan. Fiat Chrysler announcing 2,000 new positions, same with GM and finally Hyundai, didn't give a specific job number, but it said it will invest $3 billion over the next five years in the U.S. In total, that's at least 4700 new jobs.

Now, some of those were promised long before Donald Trump was elected. But the companies now are trying to make sure they get credit for growing jobs in the U.S. The big question on these responses to Trump's calls for American manufacturing or employment shifts now, the hope of lower corporate tax rates in the future which would help pay for all of it.

You know, here's a reality check the number of automakers that make cars and parts are nowhere where it was in the early 2000s. Automakers just hit back-to-back annual sales records in 2015 and 2016. I think the tone has changed, John. And these companies want to at least remind the president-elect that, hey, we have big operation information the U.S., we have a big footprint in the U.S., but we do have a globalized business and we do have production elsewhere.

I think the Walmart news was very interesting that it's adding these jobs. If you look carefully at Walmart's announcement, incredibly important for the U.S., retraining workers, no question there. It's essentially the pace of job creation that's already had. So, it's essentially saying we're going to keep hiring the way we have been.

BERMAN: But it's also probably smart business to give some credit to the incoming administration if you want to get the favor of the incoming administration.

ROMANS: Absolutely. Especially if there's going to be tax reform. If you cut corporate taxes for all of these companies, that maybe that pay for the investment they're doing here.

All right. Forty-four minutes past the hour.

A man accused of killing a police officer and his pregnant girlfriend. He's behind bars this morning. You're going to hear from the emotional police chief about that capture, next.

(COMMERCIAL BREAK)

[04:47:58] BERMAN: An 18-year veteran of a suburban Dallas police force has been killed in the line of duty. Detective Jerry Walker, a 48-year-old father of four, was fatally shot in a standoff for the barricaded gunman. Walker is the first officer from the Little Elm Police Department to be killed on the job. Authorities tell us the suspect was found dead inside the home. It happened overnight. His identity has not been released.

ROMANS: The man suspected of killing an Orlando police officer and his own pregnant ex-girlfriend is now in custody after more than a month on the run. Police arrested Markeith Lloyd Tuesday after tracking him to an abandoned house. They say he was wearing body armor, he had two handguns, he tried to escape.

The Orlando police chief said that after a struggle, they put Lloyd in handcuffs, handcuffs that belonged to slain Police Officer Debra Clayton.

(BEGIN VIDEO CLIP)

CHIEF JOHN MINA, ORLANDO POLICE DEPT.: To put her handcuffs on the bad guy that she was trying to catch when she was killed is just significant, and is meaningful to her family, which I did tell Seth Clayton about it. It's meaningful to her OPD family as well.

(END VIDEO CLIP)

ROMANS: The 41-year-old Lloyd faces two murder counts. Police arrested three people for allegedly helping him evade capture, and they say more arrests are expected.

BERMAN: All right. One of my favorite days of the year, the Baseball Hall of Fame announces the class of 2017 will be announced later today. Outfielder Tim Raines finally, pitcher Trevor Hoffman and first baseman Jeff Bagwell, they're considered favorites for the induction. The Hall of Famers are chosen by the baseball writers.

Now, that about the guys linked to steroids over the years, Barry Bonds, Roger Clemens, they're not likely to mike it today. However, the percentage of vote that they're getting is going up. You need 75 percent, as you know, to get in. Their numbers are getting better each year. And it doesn't seem impossible now. This is quite different from a year ago, it doesn't seem impossible that these guys will get in.

ROMANS: So, their performance enhanced by time. Time heals all wounds.

Chinese President Xi Jinping touting the benefits of free trade in his speech and warning against some of the protectionist talk coming out of the Donald Trump transition team.

CNN Money editor at large Richard Quest joins us live from Davos this morning. It's such a pretty picture. He's the host of "QUEST MEANS BUSINESS" on CNN International.

BERMAN: The scenery is not bad either.

ROMANS: The scenery is not bad, and look at Richard, what a dashing young man.

Richard, tell me about Trump. Trump is clearly the word on the lips of everyone at Davos. He personifies a rejection of everything those globalists in those rooms, those panels, have been searching for for the past 30 years. What do they say about Mr. Trump?

RICHARD QUEST, CNN MONEY EDITOR AT LARGE: OK. There's two things they will tell you. They will say openly give him a chance. Let's see what happens. Let's understand where he's going. If he succeeds it's for everyone's benefit.

And then when the microphone is switched off, when they're quietly talking in the coffee bars, they'll say, what on earth is going to happen? How did the American people vote in this way?

I promise you this, John and Christine, they will -- they're not terrified in an eeh sort of way. They're more like the scream, the mountain (ph) scream, you know, what's going to happen? How's it all going to pan them out? What's going to happen with all of the tweets? Is this a responsible way of government?

[04:55:01] Because as you rightly say, what he has put forward goes against everything that they hold dear which is detailed considered policy direction, based on evidence. And what they say is, we've no idea what happens next.

BERMAN: Joe Biden, the vice president of the United States for another 36 hours or so, speaking right now in Davos. He was talking about globalism. We're looking at live pictures right there of Vice President Biden speaking.

And he did bring up Donald Trump, the president-elect of the United States. And we're told when he mentioned the name, it received a smattering, let's say, of displeasure. But when Vice President Bide is talking, promoting globalism, it's almost as if, you know, why does it matter now, Richard, what he is saying? This is not the position of the United States anymore as of Friday.

QUEST: Now, let's just pause a minute. I'm going to take the other point of view here because I think to some extent, we've beaten up on the Trump trade policy perhaps too much.

Remember, what Donald Trump is saying is not free trade, but fair trade. And there are people here and I know a couple of members, for example, the CEO of Dow Chemicals who is on this step with me, who basically said, listen, there's nothing wrong with fair trade. Making sure it's a level playing field.

And there will be people here in Davos who say, look, it's great to have Xi, you have Xi yesterday, President Xi of China, talking about free trade. Well, that's great for the country that has protectionists. That has restrictions. That has a currency that's being manipulated and is by no means an open economy.

So, yes, President Xi, by all means come here and talk free trades. And now perhaps start practicing it. There is that point of view, too.

ROMANS: There is also this concern, this dread, among some of those folks there, some of the globalists, some of the people on Wall Street because they don't know if Donald Trump is measured in the things -- they don't think he's measured in the things he said.

For example, his comments about the dollar. The strong dollar policy is the cornerstone of American leadership.

QUEST: Right.

ROMANS: To abandon strong dollar policy is an absolute change in direction for the largest, wealthiest economy, democracy. His comments pulling, you know, the dollar down to the lowest in a month or so, you know, kicking down the dollar. What do you make of that? What do you make of his shift on it, or is it not a shift? Is it just an off-the-cuff remark?

QUEST: It's an off-the-cuff remark. Christine, you and I have covered this for too long. We can see in our sleep, the strong dollar is in the interest of the United States. If I'm heard one treasury secretary say it once, I've heard it a million times. But they usually follow it up with, I don't comment on the dollar. The market finds the natural level of the currency.

So, I think for the president-elect to start talking about the dollar, he will find himself in very hot water quickly, as the markets react. Let me show you the concerns of people in Davos. And think about where you would be on the scale of uncertainty. People are concerned about Trump, Brexit, trade, Russia, populism,

China, cyber, politics, protectionism. When you ask them where on the scale of uncertainty, this is where they all are. Plus five in terms of uncertainty.

Now, John, where would you be on this chart, uncertainty for what's going to happen in 2017? Where would you and Christine want me to put you?

BERMAN: Uncertainty? Based on where I've been in the last year, I've been off the charts. You can put me somewhere in Hungary right now on that chart.

(LAUGHTER)

QUEST: You're off the chart. We won't bother with you.

Christine?

ROMANS: I'm somewhere off that right shoulder in that stand of trees. I'm off the chart, too.

Look, we have been wrong. We have been -- in terms of the parameters that we've been using over the past year or so, Donald Trump has reset those parameters, right? And I think that's what so many of the people there -- they think maybe that's going to jump.

I mean, certainly, Wilbur Ross, somebody you and I both know well, he is someone who says, look, we can go in there, we can change the relationship with trade and China. We can make it fair for American workers and for American factories and for American manufacturers. There are things we can do that won't cause the big selloff you said was going to happen. Just let us do our job.

I think today will be really interesting to hear from Wilbur Ross about China, and about trade, and about NAFTA, Richard.

QUEST: Yes, providing you're looking at things in a transactional deal-making way, that's fine. But I was at a breakfast this morning where people are talking about, you can't do that always with public policy.